Strauss Group: wraps up 2020 with 4.6% organic growth

Petach Tikva / IL. (sg) Israel’s Strauss Group Limited published its 2020 financial non- GAAP statements, demonstrating that the international food and beverage company has dealt with the challenges posed by the Covid-19 pandemic successfully. The company’s sales in local currencies grew in most categories in which it is active globally. The Group ended 2020 with NIS 8.35 billion in revenues, reflecting a sharp organic rise of 4.6 percent. Negative currency translations on the back of a very strong NIS, particularly from the Brazilian real, totaled NIS 589 million, leading to a 2.2 percent decline in the company’s reported income.

Organic operating profit, excluding the foreign currency effect, rose by a sharp 5.4 percent and amounted to NIS 924 million – 11.1 percent of revenues. The company wrapped up the year with NIS 551 million in profit attributable to shareholders – an increase of 0.7 percent compared to last year and accounting for 6.6 percent of revenues. The company also published its thirteenth sustainability report.

Chairman’s Statement

Strauss Group chair, Ofra Strauss: «We are summing up 2020 using the same words as always, through the various elements in our financial statements. Seemingly, life goes on as usual, but 2020 was a year that was anything but usual. Everything we perceived in our personal lives changed, and it was the same for Strauss Group. This year in its entirety was a test of Strauss Group’s resilience and its ability to maintain business continuity in unprecedented conditions. All along the way, protecting people’s lives and health was our guiding light, and contacts with our stakeholders took on a new meaning. The ability to collaborate with retailers to supply people with food was a test of our abilities, but it was mainly a test of the trust and partnerships that were built, in the course of many years, between Strauss Group and all our stakeholders in Israel and around the world. These relationships were what enabled us to fulfill our mission and continue to supply security and food in times when uncertainty was great and food was both a cure and a comfort.

«This year, the term ‘sustainability’ took on a broader meaning. Sustainability in its most basic sense once again became our top priority – responsibility for the physical and emotional health of people while protecting our natural resources.

«For me personally, this year was also a year of great loss and sad parting on the passing of my father, Michael Strauss. My father founded and shaped Strauss Group on the basis of values of partnership and mutual responsibility. This year was living proof of the importance and centrality of these values to our ability to cope with the unexpected, prevail over crises, big and small alike, and to keep on doing what we are meant to do, together.

«Next week we will be celebrating Passover. This year, we will be able to once again celebrate together with our extended families, under lighter restrictions than those that were imposed on us last year. Passover is the festival of freedom, and I truly hope that the unprecedented vaccination campaign will allow us, at least here in Israel, a little more freedom, general and personal, less social distancing and greater physical closeness.»

Chief Executive’s Summary

Strauss Group CEO, Giora Bardea, commented on the Group’s results: «Thanks to the strength of our business, our financial resilience, our operational stability and flexibility, we were able to emerge from this singular, complex and unexpected year with impressive growth in sales and profitability. This achievement was made possible by our ability to generate strong sales in most categories across all our businesses, particularly sales to the retail sector, and in this way, we were able to overcome the drop in sales in the away-from-home (AFH) channels, notably on-the-go impulse buys, restaurants, cafés, offices and hotels – all of which were harmed by the pandemic. I estimate that in the near future, we will also see recovery in this sector as Israel returns to routine, and later on, in other countries as well.

Despite the many challenges, in 2020 we continued to plan ahead and even expedited processes of growth and development in numerous strategic channels: we broadened our collaboration with Arla, began distributing Alpro products in Israel and decided on the establishment of a manufacturing plant for the production of plant-based milk substitutes in Israel. Moreover, this year we built a new production site for fresh vegetables at Kibbutz Bror Hayil and saw progress in the construction of Strauss Water’s manufacturing facility in China, which will be completed in the coming months. We built a new logistics center for our coffee business in Ukraine and made two acquisitions that will grow the coffee business in Brazil.

This year we also enlarged our startup portfolio in our FoodTech incubator with the addition of six new companies. Several of these startups have completed additional rounds of funding, raising tens of millions of dollars, which is evidence of their technological progress, of the various investors’ belief in them, and of their inherent potential for the Group.

In addition to the financial statements and in our desire, as a resilient company, to be one that creates an impact on the communities in which it is active, this morning we also published our annual sustainability report, which reflects Strauss’s commitment to working to create economic, social and environmental value as a foundation for our stakeholders’ trust.»

Strauss Israel, which holds a 12 percent share of the Israeli food and beverage market, recorded impressive growth of 7.9 percent in 2020 – more than the growth of the market that is relevant to its products (according to StoreNext). The company’s revenues amounted to NIS 3.7 billion, and most of the sales growth is due to the brands of the dairies, Strauss, Yotvata and Danone; Achla salads, dips and spreads; Yad Mordechai products; and Elite «Para» (the iconic Cow) chocolate tablets. The increased sales is the result of the lengthy lockdowns that kept people at home, as well as the home cooking and baking trend that flourished during the pandemic. Operating profit this year was NIS 418 million, rising by 12.8 percent to 11.3 percent of sales. Strauss Israel has reported a significant increase in online (e-tail) sales on the various platforms used by the company, which now account for about 7 percent of sales.

Strauss Coffee reported growth in sales by volume in most countries, with strong growth in local currency sales in Poland, Russia and Ukraine as well as Brazil, where Três Corações reached a market share of 31.2 percent following 8.4 percent organic growth in local currency. In Israel, the coffee company recorded a dramatic increase of 31 percent in coffee capsule sales (according to StoreNext) and a continued rise in the number of BeanZ customers. However, the company’s sales to hotels and restaurants, as well as sales by the Elite Café chain, which account for around 10 percent of its business, were significantly harmed by the lockdowns. The coffee company ended 2020 with NIS 3.28 billion in revenues, reflecting 2.5 percent organic growth (excluding the foreign currency effect) as a result of an increase in sales in the retail channels, which was offset by the damage to the AFH channels.

Sabra, which is the biggest dips and spreads company in the US and has a market share of 61.9 percent, experienced a challenging year. The company was mainly affected by its AFH sales, including sales to restaurants and sales of combination packs intended for on-the-go consumption. Sabra also experienced supply chain difficulties as a result of the pandemic. The company ended 2020 with sales of NIS 1.3 billion, an organic drop of 3.2 percent compared to 2019 excluding the foreign currency effect. Obela, which this year began self-distribution of its products in Germany, wrapped up the year with sales of NIS 163 million – 1.2 percent organic decrease excluding the foreign currency effect.

Strauss Water has continued on its path of improvement and success. The company experienced a strong year in its global activities, posting dramatic growth of 6.4 percent in sales, which amounted to NIS 668 million, as well as an extremely sharp rise of 21.4 percent in operating profit. These results were achieved despite the lockdown in China in early 2020 and the Covid-19-related restrictions throughout the year in Israel. The company has reported record sales of new water bars in Israel and the UK, and impressive growth in fourth quarter sales in China, particularly online.

Sustainability Report Extract

In line with Strauss Group’s guiding concept and its desire to create an impact in the communities in which it works, the Group is publishing its sustainability report today for the thirteenth time.

The report describes the impacts of the Group’s business, social and environmental activities on its stakeholders in 2020. The report presents the Group’s main activities across the globe, aimed at creating economic, environmental and social value within and for the benefit of the communities in which it operates. This year’s report focuses on four central themes – activities for the benefit of stakeholders during the pandemic, activities for the benefit of people and communities, environmental protection and responsible business practices.

During the pandemic, the Group worked vigorously everywhere in the world to protect and support various population groups, medical personnel, senior citizens, vulnerable populations and families badly affected by the pandemic. This year, the Group continued to broaden its diversity and inclusion activities, with 45.4 percent of management positions and 58 percent of board seats filled by women. The Group also increased its investment in the integration of diverse population groups throughout the entire job spectrum, and in tandem with the in-house launch, Strauss is working to further the subject in numerous circles outside the Group.

As part of our commitment to improve the food we manufacture and to enable diverse populations to enjoy our products, this year we removed 142 tons of sugar, reached 786 gluten-free products, and 74 percent of our products are adapted to the needs of diverse consumer groups (gluten-free, vegan, lactose-free, etc.). Guided by our commitment to the environment, in the past five years we reduced our greenhouse gas emissions by 17 percent and recycled or reused approximately 90 percent of our solid waste. The report, published this morning, presents the environmental goals set by the Group for the coming years.

Group Contributions

Strauss Group is active in diverse communities, placing emphasis on diversity and inclusion and on promoting a balanced diet and healthy lifestyle, and supports its stakeholders in a variety of ways. In total, in 2020 the Group donated more than NIS 25 million – double the amount donated in 2019. Despite the pandemic, this year Strauss employees devoted some 7,000 volunteer hours in the framework of different projects in communities around the world.

bakenet:eu